It’s been a fairly regular complaint of consumers that they can’t seem to get a decent credit score because they have no credit. Well, complain no more….in the next several months FICO score announced a program it will pilot that will include bill repayment history for utility bills, making it easier for millions of Americans to establish credit.

The argument behind this program is to allow almost 50 million American consumers to earn credit and potentially be approved for a credit card. The company behind FICO, a scoring model that boils your credit history down to a three digit number that instantly tells a lender whether or not you are credit worthy, says that almost 90% of lending decisions, such as credit card applications, automobile loans and mortgage loans are based on a consumer’s FICO score. If you don’t have a FICO score, a bank is certainly not going to extend you credit and without a credit card or loan repayment history a consumer can’t get a score. Including a consumer’s repayment history would allow millions of consumers to establish a score and apply for credit.

Over the past two years, supporters of this program have studied that consumers who pay their bills on time are likely to continue this habit of responsible repayment for all of their bills, including credit cards and/or automobile loans. Supporters also argue that this program will allow a greater number of responsible consumers to receive credit and will aid our economy long term. The idea being that once a consumer obtains a credit card using his or her bill repayment history, the consumer would eventually apply for an automobile or mortgage loan.

Under the program, the credit reporting agencies will create a payment history profile using a consumer’s utility bills, including cell phone, gas and electric, and use this data to create an alternative credit score. Lenders can use this score for a consumer who has virtually no credit history when deciding whether or not to extend the consumer credit. This alternative score will only be available to the largest credit card companies, while the program is in its initial stages and if the program is successful, more banks can participate.

For more information on your credit report or credit score, contact SmithMarco P.C. for a completely free case review.